TIMEhttp://time.com
Breaking News, Analysis, Politics, Blogs, News Photos, Video, Tech ReviewsTue, 31 Mar 2015 20:55:52 +0000enhourly1http://wordpress.com/http://0.gravatar.com/blavatar/2cee445ea71a179ffd35ea91cf154905?s=96&d=http%3A%2F%2Fs2.wp.com%2Fi%2Fbuttonw-com.pngTIMEhttp://time.com
Would You Trust Your Retirement to a Machine?http://time.com/money/3746328/robo-advisers-betterment-wealthfront/
http://time.com/money/3746328/robo-advisers-betterment-wealthfront/#commentsTue, 31 Mar 2015 10:00:58 +0000http://time.com/?post_type=money_article&p=3746328]]>Betterment looks like a startup right out of tech disrupter central casting. Its office, in an airy loft space, features a beer tap and Ping-Pong table. The founder, Jon Stein, favors open-necked shirts at work, not a suit and a tie. He is 35 years old.

But Betterment isn’t in Silicon Valley, and it’s not selling chat apps, cat videos, or cheap car rides. It’s in Manhattan and trying to make a splash in the very serious business of investment advice. Stein has a Wall Street résumé: He’s a former banking consultant and a chartered financial analyst. He also thinks that Wall Street charges way too much and that Internet-based companies can fundamentally change the way you invest for your retirement. “We’ve taken the friction out of the process. We’ve made [advice] accessible to everyone. That is the future,” says Stein, with the modesty you’d expect from a tech CEO.

What Stein calls “friction” other advisers call a good business. Advice can be expensive. You may pay about 5% off the top for a commission-based adviser who puts you in mutual funds. Or you might pay an annual fee—1% of assets is typical—but many advisers and planners often won’t bother with clients who don’t have a lot to invest. “It’s almost like there were two options: walking, or driving a Mercedes,” says Michael Kitces of Pinnacle Advisory Group.

Betterment and at least a dozen competitors, including Wealthfront and FutureAdvisor, think web tools and computer models can deliver advice much more cheaply. Known (sometimes pejoratively) as robo-advisers, they pick investments for you and monitor your portfolio. Many do it for 0.15% to 0.5% of assets a year and welcome tiny balances.

Private venture capital investors are racing in—Betterment recently got a shot of $60 million. Using Betterment’s implied value as a yardstick, VCs think a robo may be worth about $30 for every $100 in client assets, vs. $3 per $100 for some traditional advisers. Robos “see themselves becoming the next Schwab,” says Grant Easterbrook, author of an industry report for the research firm Corporate Insight. “Based on the money they’ve gotten, the VCs believe them.”

A close look at what most robos do reveals a fairly cookie-cutter, if common-sense, investment approach—one many MONEY readers would feel comfortable doing themselves. And there are important things the services haven’t yet figured out how to do well.

Still, this could start to finally open up advice to a bigger chunk of middle-class investors, not just the wealthy. Even if robos aren’t for you now, you may soon benefit from the way they’re changing the business. Other sites, such as LearnVest and Personal Capital, are using technology to connect you to a human adviser or planner you just never happen to meet in person. Established players like Vanguard and, yes, the current Schwab are responding with their own low-cost offerings. (Schwab’s headline price: free.) The existence of the robo option puts pressure on everyone’s prices.

In other words, you don’t need to buy the Mercedes. “Now there are Kias. There are Fords,” says Kitces. “There are a lot more choices.” Here’s how those choices stack up today, and what they can do for you.

]]>http://time.com/money/3746328/robo-advisers-betterment-wealthfront/feed/0150326_ADV_ROBOADVISOR01turnercowlesWhy GoDaddy’s IPO Shares Look Cheaphttp://time.com/money/3764168/godaddy-ipo/
http://time.com/money/3764168/godaddy-ipo/#commentsMon, 30 Mar 2015 19:54:52 +0000http://time.com/?post_type=money_article&p=3764168]]>GoDaddy, the website hosting service with the provocative ads and a NASCAR sponsorship, is going public this week. Everyone loves a coming-out party, particularly for a well-known consumer brand. In general, however, investors ought to be appropriately skeptical of initial public offerings, particularly for well-hyped technology companies. In these transactions – as with any investment — price is what you pay and value is what you receive: Below, I lay out my initial thoughts on GoDaddy’s valuation.

“We have a history of operating losses and may not be able to achieve profitability in the future.”

That is one of the prominent risk factors that greets prospective investors in GoDaddy’s most recent prospectus. On a GAAP [generally accepted accounting principles] basis, GoDaddy has lost $622 million cumulatively over the past three years – hardly inconsequential for a company that generated $4.2 billion during that period. The good news, however, is that, as of last year, GoDaddy is profitable on the basis of free cash flow (which is what really matters, ultimately — not GAAP earnings).

By my calculations and based on a share price of $18 (the midpoint of the current indicative range of $17 to $19), GoDaddy’s enterprise value-to-EBITDA multiple is 7.2. Enterprise value (EV) is the sum of a company’s market capitalization and its net debt; EBITDA is a measure of cash flow, the acronym refers to earnings before interest, taxes, depreciation and amortization.

It’s cheap, surely

On that basis, GoDaddy is cheaper than all 10 companies in Bloomberg’s selection of comparable companies for which this multiple exists and roughly in line with AOL AOL INCAOL0.46%, at 7.5. The median for the group, which includes Facebook, Google, IAC/Interactive IAC/INTERACTIVECORPIACI0.7%, Yahoo! and Yelp is 15.1.

So, GoDaddy looks cheap, then. If only it were that straightforward. I calculated GoDaddy’s EV/EBITDA using the firm’s own adjusted EBITDA figure of $271.5 million. However, Bloomberg puts 2014 EBITDA at $90.9 million, which would lift the EV/ EBITDA to 21.8. All of a sudden, GoDaddy is more expensive than all but three of its peers and significantly more expensive than Google, for example, at 14.7. As such, using EV/ EBITDA is inconclusive until one examines the adjustments the company makes to derive its EBITDA figure. I would tend to remain skeptical and lean toward an “expensive” verdict here.

On the other hand, looking at the price-to-free cash flow multiple, GoDaddy looks like a remarkable bargain at 2.3. Alas, a whopping three-quarters of its $443.8 free cash flow to equity in 2014 was the product of an increase in long-term borrowings — not a sustainable source of free cash flow. Still, even if we substitute the operating cash flow figure of $180.6 million for free cash flow, the multiple only rises to 5.6, which looks very reasonable by comparison with AOL (9.2), IAC/Interactive (15.1) or Yahoo! (85.3). In fact, that multiple would put it at the very bottom of its peer group.

Finally, let’s resort to a blunt instrument: the price-to-sales multiple. For GoDaddy, that number is 0.73, which looks pretty darn cheap for a technology company. The S&P North American Technology Sector Index was valued at 2.92 times sales at the end of February.

May be cheap… within the indicative pricing range

I’m going to come down on the side that says, based on this preliminary assessment, GoDaddy shares look cheap. (That holds at the $18-per-share midpoint of the indicative pricing range, which could of course end up being substantially lower than the price at which they become available in the secondary market.) The Wall Street Journal reported last week that the GoDaddy IPO could see the company raise as much as $418 million and give it a market value near $3 billion.

Furthermore, the business has some attractive qualities, including its high retention rates (over 85% in aggregate and approximately 90% for customers that have been with the service for over three years). Nevertheless, I would strongly encourage investors who are considering buying the shares to read the prospectus closely, particularly the “Risk Factors” section (all 36 pages of it!). Everyone likes to imagine what could go right with an investment, but a prudent investor likes to spend more time gauging what could go wrong.

Munger, the 91-year-old billionaire vice chairman of Berkshire Hathaway, has two amazing traits: He’s brilliant, which gives him authority, and he’s rich and old, which amplifies freedom of speech to a level most of us couldn’t get away with. He says what’s on his mind without fear of offending anyone. It makes him one of the most quotable investors of all time.

Munger gave a talk this week at the Daily Journal, where he’s chairman. Investor Alex Rubalcava took notes. Here are some great things Munger said (my comments below).

“I did not succeed in life by intelligence. I succeeded because I have a long attention span.”

Time is the individual investor’s last remaining edge on professionals. If you can think about the next five years while most are focused on the next five months, you have an advantage over everyone who tries to outperform based on sheer intellect.

“The finance industry is 5% rational people and 95% shamans and faith healers.”

There are few other industries in which people are paid so much to be so consistently wrong while clients come back for more without demanding any change.

“I think that someone my age has lived through the best and easiest period in the history of the world.”

People ignore the really important news because it happens slowly, but obsess over trivial news because it happens all day long. News headlines will forever be dominated by pessimism, but by almost any metric we are living through the greatest period in world history.

“When things are damn near impossible, maybe you should stop trying.”

Related: Everyone should know the difference between patience and stubbornness. Patience is the willingness to wait a long time while remaining open to changing your mind when the facts change. Stubbornness is the willingness to wait a long time while ignoring and dismissing evidence that you’re wrong.

“Other people are trying to act smarter. I’m just trying to be non-idiotic.”

Napoleon’s definition of a military genius was “The man who can do the average thing when all those around him are going crazy.” It’s the same with investing: You don’t have to be brilliant, you just have to consistently be not stupid.

“If the incentives are wrong, the behavior will be wrong. I guarantee it.”

Anyone criticizing the behavior of “greedy Wall Street bankers” underestimates their tendency to do the same thing if offered an eight-figure salary.

“I don’t spend too much time thinking about what is almost certain never to happen.”

“I don’t think anything that any average person can do easily is likely to be worthwhile.”

Good investing hurts. It’s not any fun. It requires the ability to endure things most people aren’t, such as bear markets that last for years and times when you perform worse than average.

“The way to get rich is to keep $10 million in your checking account in case a good deal comes along.”

You don’t need $10 million, but cash in the bank will be the best friend you’ve ever had when stocks fall. If you’re upset that your cash is earning a dismal interest rate right now, you’re doing it wrong. Cash’s value isn’t its ability to earn interest. Providing flexibility and options is how it earns its keep.

“Nobody survives open heart surgery better than the guy who didn’t need the procedure in the first place.”

Avoid debt. Spend less than you earn. Advocate humility. Learn from your mistakes. If you can manage to not screw up too many times in investing you’ll probably do just fine over time.

]]>http://time.com/money/3763296/charlie-munger-berkshire-hathaway-buffett/feed/0150330_INV_MungerkaravbrandeiskyWhat You Can Learn From 401(k) Millionaires in the Makinghttp://time.com/money/3746303/401k-millionaires-lessons/
http://time.com/money/3746303/401k-millionaires-lessons/#commentsMon, 30 Mar 2015 10:52:56 +0000http://time.com/?post_type=money_article&p=3746303]]>The 401(k) has become the No. 1 way for Americans to save for retirement. And save they have. The average plan balance has hit a record high, and the number of million-dollar-plus 401(k)s has more than doubled since 2012. In the first part of this series, we shared tips for building a $1 million retirement plan. Now meet workers on track to join the millionaires club—and get inspired by their smart moves. Once you hit your goal, learn more about making your money last and getting smart about taxes when you draw down that $1 million.]]>http://time.com/money/3746303/401k-millionaires-lessons/feed/0150316_MIL_Hill2turnercowlesTwo Big Reasons You Won’t Be Spending More On Gas Anytime Soonhttp://time.com/money/3758194/oil-saudi-arabia-china/
http://time.com/money/3758194/oil-saudi-arabia-china/#commentsWed, 25 Mar 2015 16:01:10 +0000http://time.com/?post_type=money_article&p=3758194]]>The beleaguered oil industry was hit with a double dose of bad news on Tuesday, which initially sent oil prices down. On the supply side, Saudi Arabia continues to make good on its refusal to cut its production, instead, it actually boosted production close to an all-time high. Meanwhile, weaker than expected demand in China doesn’t appear to be improving as factory data from the world’s top oil importer slipped to an 11-month low. Unless these two trends reverse course both could continue to put pressure on oil prices in the months ahead.

Gushing supplies

Saudi Arabia is making it abundantly clear that it has no intention of cutting its oil production to reduce the current glut of oil on the market. This past weekend its OPEC governor, Mohammed al-Madi, said that the market can forget about a return of triple digit oil prices for the time being. That statement was backed up by the country’s oil production data, which according to a Reuters report is now up to 10 million barrels per day. Not only is that near its all-time high, but its 350,000 barrels per day more than the country told OPEC it would produce last month. In fact, as we can see in the following chart the Kingdom’s oil output has steadily risen over the past few decades and is nearing its previous peak from the 1980s.

Typically the Saudi’s are the first to cut oil production when the market has too much supply. However, this time it’s more concerned with keeping its share of the oil market that it’s willing to flood the market with cheap oil in order to slow down production growth from places like the U.S., Canada, and Russia. This is leaving the world short of places to put the excess oil asstorage space is quickly running low due to weaker than expected demand.

China continues to slow

To make matters worse, China, which is the world’s second largest economy and top oil importer, continues to see its economic growth slow suggesting its demand for oil could be even more tepid in the months ahead. The latest data out of China shows that factory activity is now at an 11-month low. This was after the HSBC/Markit Purchasing Managers’ Index was at 49.2 for March, well below the 50.7 mark from February. Not only is that below the 50.6 that economists had expected, but it’s now below the 50-point mark that separates growth from a contraction.

That’s bad news for oil prices because as the following chart shows China’s rapidly expanding economy has been a key driver of its surging oil demand over the past decade.

With China’s economic growth slowing down it’s leading to a slowdown in its demand for oil. That leaves robust global oil supplies with nowhere to go at the moment as demand for oil in Europe has been weakened by its own economic issues while the U.S. no longer needs as much imported oil thanks to efficiency gains as well as its own robust output. This will put pressure on oil prices as increased demand for oil from China was seen as a key for an oil price rally.

Investor takeaway

So much for peak oil as Saudi Arabia has now pushed its production close to its all-time high with no signs that it plans to tap the brakes. That’s coming at the worst possible moment as the oil market is oversupplied by upwards of two million barrels per day at the moment due to weaker than expected demand in China. Worse yet, Chinese demand could start to contract as its economic machine is notably showing down. This means that investors in oil stocks are in for more volatility as the market continues to work through its supply and demand issues.

Related Links

]]>http://time.com/money/3758194/oil-saudi-arabia-china/feed/0150325_INV_OilPriceskaravbrandeiskySaudi Arabia Crude Oil Production ChartChina Oil Consumption Chart3 Ways to Profit by Going Against the Crowdhttp://time.com/money/3746474/stock-market-energy-crisis-deflation/
http://time.com/money/3746474/stock-market-energy-crisis-deflation/#commentsWed, 25 Mar 2015 10:00:28 +0000http://time.com/?post_type=money_article&p=3746474]]>Take a deep breath. After a whirlwind start to the year, you can be forgiven for feeling nervous about the state of the financial markets.

Yes, the Dow and the S&P 500 are back up after sharp declines earlier this year. But stocks are still on pace for their most volatile year since 2011. Sure, plunging prices at the pump are good for consumers, but they’ve taken a hammer to energy stocks. And interest rates around the world keep sinking. While falling yields boost the value of older bonds in your fixed-income funds, they sure make it hard to generate any income.

Rather than following the crowd that’s selling on today’s fears, take advantage of falling prices and do a little bargain hunting. Here are three places where that’s possible.

THE ROCKY STOCK MARKET

The worry: In 2013 and 2014, the S&P 500 experienced daily swings of 1% or more about once every six trading days. So far this year, it’s been one in three.

What the crowd is doing: Racing into low-volatility funds that focus on boring Steady Eddie companies like Procter & Gamble. As a result, the price/earnings ratio for stocks in the PowerShares S&P 500 Low Volatility ETF is 12% higher than the broad market. Yet “low vol” shares have historically traded at a 25% discount.

The smarter move: Look to an industry that’s not particularly thought of as a safe harbor in a storm: technology. Mature tech anyway. “On a relative basis, older, established tech firms look really attractive,” says BlackRock global investment strategist Heidi Richardson. Many tech giants, such as Apple APPLE INC.AAPL-1.49%, trade at P/E ratios of around 15 or less.

They also have a ton of cash, which lets them invest in research and development while still paying dividends. Moreover, the recent volatility in stocks has stemmed from fears that the Federal Reserve may start hiking rates this year. Well, tech has historically outpaced the S&P 500 in the six months following rate hikes. Lean into this group through iShares U.S. Technology ISHARES TRUST REG. SHS OF DJ US TECH.SEC.IDXIYW-0.89%. Apple, Microsoft, and Intel make up more than a third of this ETF’s holdings.

THE ENERGY CRISIS

The worry: Oil prices may not be done falling. UBS, in fact, believes that the price of a barrel of crude may not return to recent highs for another 60 months.

What the crowd is doing: Ditching blue-chip energy stocks, including giants such as Conoco-Phillips and Halliburton, which have sunk 20% to 40% lately.

The smarter move: Play the odds. The Leuthold Group found that a simple strategy of buying the market’s cheapest sector—now energy, based on median P/E ratios—and holding on for a year has trounced the broad market. “Value surfaces without even needing a catalyst,” says Doug Ramsey, Leuthold’s chief investment officer.

You can gain broad exposure through Energy Select Sector SPDR ETF ENERGY SELECT SECTOR SPDR ETFXLE-0.59%, which beat 99% of its peers over the past decade and charges fees of just 0.15% a year.

THE THREAT OF DEFLATION

The worry: Rates around the world will keep sinking, as conventional wisdom says deflation is a bigger threat than inflation.

What the crowd is doing: Pulling billions from products such as Treasury Inflation-Protected Securities that are meant to guard against rising prices—investments now yielding even less than regular bonds.

The smarter move: Embrace that lower-yielding debt, at least with a small part of your portfolio. Joe Davis, head of Vanguard’s investment strategy group, says inflation may not spike soon. But the time to buy inflation insurance is when no one is scared, and it’s cheap. Consumer prices would only have to rise more than 1.8% annually over the next decade for 10-year TIPS to outperform.

Conservative investors should look to short-term TIPS, which are less sensitive to rate hikes, says Davis. Vanguard Target Retirement 2015, for instance, allocates about 8% of its portfolio to the Vanguard Short-Term Inflation-Protected Fund VANGUARD SH-TRM INF-PRTC SEC IDX IVVTIPX-0.04%.

]]>http://time.com/money/3746474/stock-market-energy-crisis-deflation/feed/0150324_INV_AgainstFlow2turnercowles8 Surprising Economic Trends That Will Shape the Next Centuryhttp://time.com/money/3755971/millennials-infrastructure-debt/
http://time.com/money/3755971/millennials-infrastructure-debt/#commentsTue, 24 Mar 2015 14:27:35 +0000http://time.com/?post_type=money_article&p=3755971]]>Forget monthly jobs reports, GDP releases, and quarterly earnings. As I see it, there are eight important economic stories worth tracking right now that could have a big impact in the coming decades.

1. The U.S. population age 30-44 declined by 3.8 million from 2002 to 2012. That cohort is now growing again. By 2023 there will be an estimated 5.8 million more Americans aged 30 to 44 than there are now, according to the Census Bureau. This is important, because this age group spends tons of money, buys lots of homes and cars, and start lots of new businesses.

2. U.S. companies have $2.1 trillion cash held abroad. Much of this is because we have an inane tax code that taxes foreign profits twice: Once in the country they’re earned in, and again when companies bring that money back to the United States. If Congress ends this rule and switches to a territorial tax system — in which countries can bring foreign-earned cash back to their home country without paying another layer of taxes, as every other developed country allows — there could be a flood of new dividends, buybacks, and investments in America. It’s huge, pent-up demand waiting to be spent.

3. U.S. infrastructure is in disastrous shape. Roads, bridges, dams, and other public infrastructure have been neglected for years. The American Society of Civil Engineers estimates that $3.6 trillion in new investment is needed by 2020 to bring the country’s infrastructure up to “good” condition. Will this happen soon? Of course not. This is Congress we’re talking about. But the good news is that this work must eventually be done. You can’t just let critical bridges and water structures fail and say, “Damn. That Brooklyn Bridge was nice while we had it.” Things will have to be repaired. Sooner rather than later would be smart, because we can borrow now for zero percent interest. But someday, it will happen. And it’ll be a huge boon to jobs and growth when it does.

4. The whole structure of modern business is changing. I’m not sure who said it first, but this quote has been floating around Twitter lately: “In 2015 Uber, the world’s largest taxi company owns no vehicles, Facebook the world’s most popular media owner creates no content, Alibaba, the most valuable retailer has no inventory, and Airbnb, the world’s largest accommodation provider owns no real estate.” Fundamental assumptions about what is needed to be a successful business have changed in just the last few years.

5. California is one of the most important agricultural states, growing 99% of the nation’s artichokes, 94% of broccoli, 95% of celery, 95% of garlic, 85% of lettuce, 95% of tomatoes, 73% of spinach, 73% of melons, 69% of carrots, 99% of almonds, 98% of pistachios, and 89% of berries (the list goes on). And the state is basically running out of water. Jay Famiglietti, senior water scientist at the NASA Jet Propulsion Laboratory, wrote last week: “Right now the state has only about one year of water supply left in its reservoirs, and our strategic backup supply, groundwater, is rapidly disappearing. California has no contingency plan for a persistent drought like this one (let alone a 20-plus-year megadrought), except, apparently, staying in emergency mode and praying for rain.” This could change rapidly in one good winter, but it could also turn into a quick tailwind on food prices. It could also be a huge boost for desalination companies.

6.New home construction will probably need to rise 40% from current levels to keep up with long-term household formation. We’re now building about 1 million new homes a year. That will likely have to rise to an average of 1.4 million per year, which combines Harvard’s Joint Center for Housing Studies’ projection of 1.2 million new households being formed each year and an annual average of 200,000 homes being lost to natural disaster or torn down. This is important because new home construction is, historically, one of the top drivers of economic growth.

7. American households have the lowest debt burden in more than three decades. And the largest portion of household debt is mortgages, most of which are fixed-rate. So when people ask, “What’s going to happen to debt burdens when interest rates rise?”, the answer is “Probably not that much.”

8. America has some of the best demographics among major economies. Between 2012 and 2050, America’s working-age population (those ages 15-64) is projected to rise by 47 million. China’s working-age population is set to shrink by 200 million, Russia’s to fall by 34 million, Japan’s by 27 million, Germany’s by 13 million, and France’s by 1 million. People worry about the impact of retiring U.S. baby boomers, but the truth is we have favorable demographics other countries can’t even dream about. This is massively overlooked and underappreciated.

There’s a lot more important stuff going on, of course. And the biggest news story of the next 20 years is almost certainly something that nobody is talking about today. But if I had to bet on eight big trends that will very likely make a difference, these would be them.

]]>http://time.com/money/3755971/millennials-infrastructure-debt/feed/0150324_INV_StoriesToWatchkaravbrandeisky3 Warren Buffett Habits We Should All Adopthttp://time.com/money/3754216/warren-buffett-success/
http://time.com/money/3754216/warren-buffett-success/#commentsMon, 23 Mar 2015 14:37:49 +0000http://time.com/?post_type=money_article&p=3754216]]>Warren Buffett has grown from a boy who at 7 years old roamed the streets of Omaha selling bottles of Coca-Cola for a nickel to a man who now sits atop the Berkshire Hathaway empire he created, with over $525 billion in assets.

Are you curious to know what habits enabled him to get there? Well, there are three we all can, and should, adopt.

Never stop learning

In the 50th annual letter to Berkshire Hathaway shareholders, Charlie Munger, the longtime second-in-command at Berkshire, spoke about one of Buffett’s most enduring and important traits that led to his success:

Buffett’s decision to limit his activities to a few kinds and to maximize his attention to them, and to keep doing so for 50 years, was a lollapalooza. Buffett succeeded for the same reason Roger Federer became good at tennis.

Buffett was, in effect, using the winning method of the famous basketball coach, John Wooden, who won most regularly after he had learned to assign virtually all playing time to his seven best players. … And Buffett much out-Woodened Wooden, because in his case the exercise of skill was concentrated in one person, not seven, and his skill improved and improved as he got older and older during 50 years.

In other words, Buffett figured out what he was good at and stuck with it through thick and thin, always honing his skill.

In the book Outliers, Malcolm Gladwell suggests that for anyone to truly become an expert at something, there is some element of inherent skill involved, but there is also a key component of practice. And the key is dedicating at least 10,000 hours of time to become a true expert. Gladwell asserts: “[P]ractice isn’t the thing you do once you’re good. It’s the thing you do that makes you good.”

He cites examples such as Bill Gates, who sneaked out of his parents’ house at night while he was in high school to learn computer coding, or the Beatles, who played eight hours a day in various bars across Hamburg, Germany, before they really mastered their craft.

And the same is true of Buffett, as he himself once remarked:

I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. I read and think. So I do more reading and thinking, and make less impulse decisions, than most people in business. I do it because I like this kind of life.

In the same way, in his hit song “I Know I Can,” rapper Nas said:

Boys and girls, listen up / You can be anything in the world, in God we trust / An architect, doctor, maybe an actress / But nothing comes easy, it takes much practice

So no matter where life takes you or what you do, always remember — whether you learn from Buffett, the Beatles, Bill Gates, or Nas — while we’ll never be perfect, persistent practice will always help take us one step closer.

Patience is key

The world around us is moving at a speed that is truly hard to grasp. As The Wall Street Journalreported, “[I]t took 75 years for telephones to achieve 50 million users, while Angry Birds reached that goal in a mere 35 days.”

Another of Buffett’s distinct and admirable characteristics is his patience.

In 2003, he noted:

We bought some Wells Fargo shares last year. Otherwise, among our six largest holdings, we last changed our position in Coca-Cola in 1994, American Express in 1998, Gillette in 1989, Washington Post in 1973, and Moody’s in 2000. Brokers don’t love us.

But consider for a moment his remarks in the 2010 letter to shareholders, in which he said that for Berkshire to succeed:

We will need both good performance from our current businesses and more major acquisitions. We’re prepared. Our elephant gun has been reloaded, and my trigger finger is itchy.

It’s widely thought that means Buffett intends to purchase a single business worth tens of billions of dollars. While his trigger finger was itchy in 2010, and Berkshire’s cash pile now stands at over $60 billion, Buffett has distinctly been willing to sit on the sidelines until the right opportunity presented itself.

There is obvious value in moving quickly into something if it’s a no-brainer decision and time is of the essence, but otherwise, we would all do well to take a step back and exhibit a little more patience.

Give credit where it’s due

One of the final things to note about Buffett is his eagerness to commend the team of managers who surround him.

Consider his 2009 remark about Ajit Jain, who heads Berkshire Hathaway Reinsurance and is widely speculated to be a candidate to replace Buffett atop Berkshire:

If Charlie, I, and Ajit are ever in a sinking boat — and you can only save one of us — swim to Ajit.

Or his remarks about Todd Combs and Ted Weschler — who each manage a sizable stock portfolio at Berkshire Hathaway — in the 2013 letter:

In a year in which most equity managers found it impossible to outperform the S&P 500, both Todd Combs and Ted Weschler handily did so. Each now runs a portfolio exceeding $7 billion. They’ve earned it. I must again confess that their investments outperformed mine. (Charlie says I should add “by a lot.”) If such humiliating comparisons continue, I’ll have no choice but to cease talking about them. Todd and Ted have also created significant value for you in several matters unrelated to their portfolio activities. Their contributions are just beginning: Both men have Berkshire blood in their veins.

Or consider his praise for Tony Nicely in 2005:

Credit Geico — and its brilliant CEO, Tony Nicely — for our stellar insurance results in a disaster-ridden year. … Last year, Geico gained market share, earned commendable profits, and strengthened its brand. If you have a new son or grandson in 2006, name him Tony.

And the list could go on and on.

Here’s a man worth more than $70 billion, who understands that the works of others were just as important to his success as his own. So no matter where we are, we should always take the time to thank the people who helped us get there.

While we’ll always only be ourselves, adopting these three habits will help us no matter where our path takes us.

Patrick Morris owns shares of Berkshire Hathaway and Coca-Cola. The Motley Fool recommends American Express, Berkshire Hathaway, Coca-Cola, and Wells Fargo. The Motley Fool owns shares of Berkshire Hathaway and Wells Fargo and has the following options: long January 2016 $37 calls on Coca-Cola, short January 2016 $37 puts on Coca-Cola, short April 2015 $57 calls on Wells Fargo, and short April 2015 $52 puts on Wells Fargo. The Motley Fool has a disclosure policy.

Bring back shoulder pads and the mullet. E.F. Hutton, another 1980s throwback, is in the financial services business again. The big question: Is this once iconic brand worth anything?

Hutton is launching the website Gateway to connect investors with independent financial advisers, estate lawyers, accountants, and insurance agents. The firm will vet its roster of financial pros, which individuals can access for free.

But this is really about helping advisers find clients. The advisers will pay Hutton a fee based on revenue they collect from clients that find them on the site. Stanley Hutton Rumbough, the grandson of legendary founder E.F. Hutton, is leading the brand’s revival from within a relatively new entity called E.F. Hutton Financial, which was incorporated in Colorado in 2007 and has no legal relationship with the old E.F. Hutton. The new firm likens itself to car service Uber in that it takes a small cut of the business it generates for advisers.

Hutton was a Wall Street heavyweight 40 years ago and is best known for its advertising slogan: “When E.F. Hutton talks, people listen.” The firm’s ads ran for years and typically featured crowds of people leaning in to hear the advice of a Hutton broker. (That’s one in the video above.) This was a powerful image during the bull market that started in 1982. After the lost decade of the 1970s, investors were getting excited about stocks again. The Hutton ad suggested that only through a broker could you gain an investing edge.

In some ways, the suggestion was ironic—coming just ahead of the massive insider trading scandals of the late 1980s, when dozens of Wall Street players, including Ivan Boesky and Michael Milken, were found to have skirted the rules for their own advantage. So much for the broker edge, which in those cases anyway was about illegal stock tips sometimes in exchange for suitcases full of cash.

Hutton became embroiled as well, and in 1985 pleaded guilty to 2,000 counts of mail and wire fraud, and paid more than $10 million in penalties in connection with a check-kiting scheme. The firm would make bank withdrawals and deposits in such a way that it gained illegal access to millions of dollars interest free for days at a time while waiting for the checks to clear.

A further irony lies in reams of new data that show that over the long haul stock pickers tend to underperform simple, low-cost index funds. Over time, the fees that active fund managers charge overwhelm their ability to pick winning stocks. This is now so well understood that the good old-fashioned stockbroker is a dinosaur. Today, industry leaders like Merrill Lynch and Morgan Stanley employ financial advisers or wealth managers who counsel clients in all aspects of their money life.

Founded in 1904, Hutton ran into capital issues following the 1987 stock market crash and disappeared in 1988 amid a spate of mergers that included Shearson Lehman Bros., American Express, Smith Barney, Primerica, and Citigroup. Former Hutton executive Frank Campanale tried reviving the brand three years ago. Campanale ditched the effort for a job with the established asset manager Lebenthal and Co., but continues to have a financial stake in the Hutton brand.

With a checkered past and four decades removed from glory, you have to wonder how much the Hutton name is worth. Then again, Michael Milken has resurfaced as a philanthropist and neon is back in style. Power up the flux capacitor, Doc. We’re going back the future.

Editor’s note: This article was updated to clarify that: 1) E.F. Hutton Financial is a different company from the original E.F. Hutton brokerage that ran into legal troubles in the 1980s; and 2) Mr. Campanale has retained a financial interest in E.F. Hutton Financial since his departure.

]]>http://time.com/money/3751675/ef-hutton-gateway/feed/0140601_Money_Gen_Investing_Marketdankadlec11 Smart Ways to Use Your Tax Refundhttp://time.com/money/3750855/tax-refunds/
http://time.com/money/3750855/tax-refunds/#commentsThu, 19 Mar 2015 14:49:32 +0000http://time.com/?post_type=money_article&p=3750855]]>Here we are, in the thick of tax season. That means many mailboxes and bank accounts are receiving tax refunds. A tax refund can feel like a windfall, even though it’s really a portion of your earnings from the past year that the IRS has held for you, in case you owed it in taxes. Still, it’s a small or large wad of money that you suddenly have in your possession. Here are some ideas for how you might best spend it.

First, though, a tip: If you’re eager to spend your refund, but haven’t yet received it, you can click over to the IRS’s “Where’s My Refund?” site to track its progress through the IRS system. Now on to the suggestions for things to do with your tax refund:

Pay down debt: Paying down debt is a top-notch idea for how to spend your tax refund — even more so if you’re carrying high-interest rate debt, such as credit card debt. If you owe $10,000 and are being charged 25% annually, that can cost $2,500 in interest alone each year. Pay down that debt, and it’s like earning 25% on every dollar with which you reduce your balance. Happily, according to a recent survey by the National Retail Federation, 39% of taxpayers plan to spend their refund paying off debt.

Establish or bulk up an emergency fund: If you don’t have an emergency fund, or if it’s not yet able to cover your living expenses for three to nine months, put your tax refund into such a fund. You’ll thank yourself if you unexpectedly experience a job loss or health setback, or even a broken transmission.

Open or fund an IRA: You can make your retirement more comfy by plumping up your tax-advantaged retirement accounts, such as traditional or Roth IRAs. Better yet, you can still make contributions for the 2014 tax year — up until April 15. The maximum for 2014 and 2015 is $5,500 for most folks, and $6,500 for those 50 or older.

Add money to a Health Savings Account: Folks with high-deductible health insurance plans can make tax-deductible contributions to HSAs and pay for qualifying medical expenses with tax-free money. Individuals can sock away up to $3,350 in 2015, while the limit is $6,650 for families, plus an extra $1,000 for those 55 or older. Another option is a Flexible Spending Account (FSA), which has a lower maximum contribution of $2,550. There are a bunch of rules for both, so read up before signing up.

Visit a financial professional: You can give yourself a big gift by spending your tax refund on some professional financial services. For example, you might consult an estate-planning expert to get your will drawn up, along with powers of attorney, a living will, and an advance medical directive. If a trust makes sense for you, setting one up can eat up a chunk of a tax refund, too. A financial planner can be another great investment. Even if one costs you $1,000-$2,000, they might save or make you far more than that as they optimize your investment allocations and ensure you’re on track for a solid retirement.

Make an extra mortgage payment or two: By paying off a little more of your mortgage principle, you’ll end up paying less interest in the long run. Do so regularly, and you can lop years off of your mortgage, too.

Save it: You might simply park that money in the bank or a brokerage account, aiming to accumulate a big sum for a major purchase, such as a house, new car, college tuition, or even starting a business. Sums you’ll need within a few or as many as 10 years should not be in stocks, though — favor CDs or money market accounts for short-term savings.

Invest it: Long-term money in a brokerage account can serve you well, growing and helping secure your retirement. If you simply stick with an inexpensive, broad-market index fund such as the SPDR S&P 500 ETF, Vanguard Total Stock Market ETF, or Vanguard Total World Stock ETF, you might average as much as 10% annually over many years. A $3,000 tax refund that grows at 10% for 20 years will grow to more than $20,000 — a rather useful sum.

Give it away: If you’re lucky enough to be in good shape financially, consider giving some or all of your tax refund away. You can collect a nice tax deduction for doing so, too. Even if you’re not yet in the best financial shape, it’s good to remember that millions of people are in poverty and in desperate need of help.

Invest in yourself: You might also invest in yourself, perhaps by advancing your career potential via some coursework or a new certification. You might even learn enough to change careers entirely, to one you like more, or that might pay you more. You can also invest in yourself health-wise, perhaps by joining a gym, signing up for yoga classes, or hiring a personal trainer. If you’ve been putting off necessary dental work, a tax refund can come in handy for that, too.

Create wonderful memories: Studies have shown that experiences make us happier than possessions, so if your financial life is in order, and you can truly afford to spend your tax refund on pleasure, buy a great experience — such as travel. You don’t have to spend a fortune, either. A visit to Washington, D.C., for example, will get you to a host of enormous, free museums focused on art, history, science, and more. For more money, perhaps finally visit Paris, go on an African safari, or take a cruise through the fjords of Norway. If travel isn’t of interest, maybe take some dance or archery lessons, or enjoy a weekend of wine-tasting at a nearby location.

Don’t end up, months from now, wondering where your tax refund money has gone. Make a plan, and make the most of those funds, as they can do a lot for you. Remember, too, that you may be able to split your refund across several of the options above.